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Medicine and Social Justice will have periodic postings of my comments on issues related to, well, Medicine, and Social Justice, and Medicine and Social Justice. It will also look at Health, Workforce, health systems, and some national and global priorities

Thursday, March 16, 2017

We have a bill! The GOP's plan to cut taxes on the rich and health care for the rest of us

Every day it gets more difficult to write about the new
“American Health Care Act” (AHCA) that has been introduced in the House of
Representatives by Speaker Paul Ryan because every day there is so much more
news about it, and so much more criticism of it that appears in the press. Even
before its introduction, the bill was attacked for being likely to
significantly increase the number of uninsured Americans while providing
windfall tax cuts for the wealthiest.

It did not disappoint. Consistent with predictions, the
nonpartisan Congressional Budget Office (CBO) estimates that initially 14
million people will lose coverage, with the number rising to 24 million in 10
years. These estimates are discussed in detail, and clarified, in “Deciphering
CBO estimates” at the Kaiser Health News site. The largest number of people
who will lose coverage will do so because of the changes – but let’s call them
what they are, “cuts” – to federal funding of Medicaid (discussed by the Health
Affairs blog), which would shift costs to the states, most of which will be
unable or unwilling to absorb these costs. The 31 states that have expanded
Medicaid to all those under 138% of the federal poverty level under the Affordable Care Act (ACA) will be
faced with having to fund a lot more from their own coffers; poor people in the
states that have not expanded Medicaid eligibility will continue uncovered. The
other group that will lose coverage will be those who have bought subsidized
insurance on the ACA-created marketplaces and who will no longer be able to
afford the premiums. Yes, the new GOP plan calls for tax credits to help pay
premiums, but they will be far less than under the ACA and far from enough to
cover the actual cost.

This change will have the biggest impact on the older,
sicker poor who are not yet eligible for Medicare (and, while I we will not address
it here, the GOP leadership certainly has plans for cutting Medicare!), whose
premiums will go up because of two important changes the AHCA will make. It
will end the “individual mandate” of ACA, so that those who feel that they do
not need health insurance can pass on buying it, which means the pool of
insured will lose those healthier people and have a pool more skewed to those
who are sicker and will actually use
health care. This will tend to drive premiums up for them, and the AHCA also
allows insurers to charge 5 times as much to older people as younger. As
reported by Thomas Kaplan and Robert Pear in the NY Times on March 13, 2017

Under
current law, in 2026, a single 21-year-old earning $26,500 with an insurance
policy that costs $5,100 a year would get a tax credit of $3,400 and would have
to pay $1,700 of the premium. Under the Republican bill, that person’s share of
the cost would drop to $1,450.

By
contrast, a 64-year-old earning the same amount would fare much worse. That
person’s $15,300 health plan would be offset by a $13,600 tax credit under
current law, leaving the consumer responsible for $1,700. Under the Republican
plan, health insurers would be free to charge older people more, raising that
person’s premium to $19,500. But the tax credit would be only $4,900, and that
person’s share of the premium would then be $14,600.

That’s a bite! And, ironically, as pointed out by Noam
Levey in the Los Angeles Times(March 12, 2017), it will hurt
Trump/GOP voters more than Democratic voters, because those Trump voters – and
the counties and states which went for Trump in which they live -- are more
likely to be in this older, sicker, group. This group of Republican voters did
not like Obamacare because the premiums, co-pays, and deductibles were going
too high and the coverage was not always great, especially for the plans they
could afford. Trump, and the GOP, promised them high-quality, affordable coverage.
These folks believed them. They voted for them. And they are not going to get it,
certainly not from the AHCA. Levey notes that “…In nearly 1,500 counties nationwide, such a person stands to lose
more than $6,000 a year in federal insurance subsidies. Ninety percent of those
counties backed Trump…[a]nd 68 of the 70 counties where these consumers would
suffer the largest losses supported Trump in November.” What can you do.
Politicians lie. This one was a whopper.

What is the reason for this? Many of Congress’ and
Washington’s leading “conservatives” say that they believe that the role of
government should be as close to zero as possible, and certainly think that the
government has no business being involved in the insurance marketplace to
ensure that people without resources have health coverage; to them, the AHCA is
too much like the ACA in that it actually makes some effort to help some
people, if weakly. There are a few of these “conservatives”, in and out of
Congress, who really believe this and act on such beliefs. Uniformly, they are
not poor, are not close to poor, and are not likely to be negatively affected.
There is a much larger contingent that only believe government should not help most people. They support legislation
that benefits rich people, like the AHCA, which uses the money it will save
(and the
CBO says that it will reduce the deficit over 10 years by $337 billion) to give
tax cuts, not evenly distributed, but very much skewed to the highest incomes.
This is where the [mean] rich people
come in; they fund the Congresspersons, and this is what they want. Rep.
Michael Burgess (R, TX), Chairman of the Energy and Commerce subcommittee on
health, is quoted in the Times on
March 11 (“The
GOP’s high-risk strategy for health law repeal”) as saying “If you ask someone to give up something,
there will be resentment,” and he is correct. That it is regular people who
are being asked to give up something by Mr. Burgess and his colleagues, so that
his rich patrons can save even more on their taxes, is something he doesn’t
focus on.

One of the most iconic differences between ACA and AHCA
focuses on equity: the subsidies (and tax credits for those who paid taxes)
under ACA were tiered to income. The tax credits that replace subsidies under
AHCA are tiered to age. Of course, as I have noted, older people are more
likely to be sick, but they are not all of the same need; some older people
have lots of money, and some have none. The same is true for younger people,
including those with medical need. In any case, the tax credits in AHCA will
not, as demonstrated above, be sufficient for those without significant other
resources to buy health coverage, even if they are in the
more-highly-subsidized older group. The Times’
Alan Rappeport reports on March 16, “One
certainty in health bill: tax cuts for the wealthy”, with 40% of the cuts
going to the top 1%, and the bill providing the necessary basis for further tax
cuts for the rich. Rappeport quotes Mike Mulvaney, the White House budget
director: “We promised at the outset that we were going to repeal all of the
taxes. Who cares if someone else benefits?” Well, maybe the people who will
suffer for their benefit? The same issue of the Times contains a brief and informative piece by Mr. Pear, “Putting
Republicans’ plan on the Obamacare scale”, examining the criticisms of ACA
and how the AHCA solves them (or not).

President Trump apparently feels conflicted; he promised the
repeal of ACA, and the Congress wants to do that. He also knows that any plan
that comes out that does this will be called “Trumpcare”, just as the ACA was
called “Obamacare”. Enough Republican senators are concerned that the House’s AHCA
will make it too hard for too many people to afford insurance that they might
vote against it, so “Mr. Trump was left
to strike a balance between siding with House Republicans while also distancing
himself from the details, with top aides conceding that the legislation needed
modifications before it could pass the full Congress,” (”G.O.P.
Senators Suggest Changes for Health Care Bill Offered by House” NY Times, March 14).

1 comment:

Great blog Josh. Clear explanation of what Trump is up to. No question that this is a prelude to cuts on Medicare, Medicaid and SS. They will need those funds to pay for tax cuts for the wealthy. So tragic the disrespect for human life that we are seeing now from the new government of the U.S.